Evan Spiegel, CEO of Snap Inc., participates in the annual Allen and Co. Sun Valley Media and Technology Conference at the Sun Valley Resort in Sun Valley, Idaho, on July 9, 2025.
Snap shares surged by 15% on Wednesday following the company’s announcement of its third-quarter earnings, showing revenue that surpassed analysts’ forecasts along with a $500 million stock buyback plan.
Here’s how the company’s performance stacked up against Wall Street’s predictions:
- Earnings per share: Loss of 6 cents. This number is not comparable to analyst projections.
- Revenue: $1.51 billion as opposed to the anticipated $1.49 billion, based on LSEG data
- Global daily active users: 477 million compared to the expected 476 million, as reported by StreetAccount
- Global average revenue per user (ARPU): $3.16 versus the expected $3.13, according to StreetAccount
Snap also revealed a collaboration with the startup Perplexity AI, which “will embed its conversation-based search directly within Snapchat.” This feature is expected to roll out in Snapchat as early as 2026, according to Snap.
“Perplexity will compensate Snap $400 million over the span of a year, through a mix of cash and equity, as we complete the global rollout,” Snap expressed in a message to investors. “Revenue stemming from this partnership is anticipated to start contributing in 2026.”
The partnership signifies “the initial phase in Snap’s aim to establish Snapchat as a venue where prominent AI companies can engage with its worldwide community in innovative and trustworthy ways,” both firms noted in their announcement.
During the company’s earnings call, Snap CEO Evan Spiegel stated that Perplexity will enjoy “default positioning in our chat inbox” and the startup will “manage the replies from their chatbot within Snapchat.”
Even though Snap will not be selling “advertising related to the Perplexity replies,” Spiegel mentioned that the integration “will aid Perplexity in attracting more subscribers, which I believe will be beneficial for their business.”
“We have a decidedly unique opportunity forthcoming to assist in distributing AI agents through our chat interface,” Spiegel remarked.
While Snapchat users will continue to engage with the company’s My AI chatbot, the integrated Perplexity AI service will deliver “up-to-date responses from reliable sources and allow exploration of new topics within the app,” the companies stated.
On the subject of Snap’s costly venture into augmented reality spectacles, Spiegel indicated that the company intends to form a standalone subsidiary dedicated to the Specs AR glasses to accelerate development in collaboration with partners.
Snap forecasted fourth-quarter sales will range between $1.68 billion and $1.71 billion. The midpoint of this forecast, $1.695 billion, slightly exceeds Wall Street’s expectation of $1.69 billion.
For the third quarter, Snap reported a 10% year-over-year increase in sales while recording a net loss of $104 million. In the same quarter of the previous year, Snap had a net loss of $153 million.
Furthermore, the parent company of Snapchat indicated that its adjusted earnings before interest, taxes, depreciation, and amortization, or EBITDA, were $182 million, surpassing the anticipated $125 million projected by StreetAccount.
The company also mentioned that its adjusted EBITDA for the fourth quarter is expected to be between $280 million and $310 million, exceeding StreetAccount’s estimates of $255.4 million.
As of Wednesday’s close, Snap shares were down 32% for the year, contrasting with Nasdaq’s 22% gain.
Although the company’s shares initially surged by as much as 25% in after-hours trading on Wednesday, they began to decline following Snap’s finance chief Derek Andersen’s comments about some of the sales challenges the company faces during the earnings call.
“The North America LCS segment continues to be the main obstacle to our overall revenue growth,” Andersen noted, adding that there is more growth and demand for Snap’s advertising solutions from small-to-mid-sized businesses in other regions.
In the investor letter, Snap indicated that governmental regulations such as Australia’s social media minimum age bill and similar policy changes “are likely to adversely affect user engagement metrics in ways we cannot currently forecast.”
“While we remain dedicated to our objective of reaching 1 billion global monthly active users, we anticipate an overall decline in DAU in Q4 due to both internal and external influences, and we expect particularly adverse effects in certain jurisdictions,” Snap stated in the letter.
The Australian Senate enacted the bill in November 2024, and once the law takes effect next month, platforms like Facebook and Instagram’s parent company Meta, TikTok, and Snap will face penalties if they do not sufficiently prevent children under 16 from creating accounts on their platforms.
Snap also mentioned in the investors’ letter that the “forthcoming implementation of platform-level age verification” by companies like Apple and Google might also have a detrimental effect on user metrics going forward.
Utah and California have enacted online child safety legislation that places the responsibility on app store providers to verify users’ ages. Utah’s law is set to be fully implemented in May 2026.
“We are also gearing up for the impending launch of platform-level age verification, which will utilize new signals given by Apple — and eventually Google — to assist us in accurately determining the ages of our users and removing those identified as under 13,” Snap noted in the letter.
Snap’s caution to investors highlights the impact that emerging laws, regulations, and policies are starting to exert on technology firms worldwide.
In the letter, Snap added that some of its initiatives aimed at enhancing monetization, like the Snapchat+ subscription service, could lead to “negative repercussions on engagement metrics as these offerings are rolled out on a global scale.”
Pinterest shares dived on Tuesday following the company’s third-quarter report which fell short of earnings per share expectations and offered weaker-than-expected guidance. The finance chief of the company, Julia Donnelly, informed analysts that Pinterest anticipates “ongoing broader trends and market uncertainty, compounded by a new tariff in Q4 affecting the home furnishing sector.”
Major tech firms such as Meta, Alphabet and Amazon released their most recent quarterly earnings reports last week, showcasing strong growth in digital advertising sales complemented by significant investments in AI-related computing infrastructure.
The parent company of Facebook experienced third-quarter revenue surge of 26% year-over-year, reaching $51.24 billion, whereas revenue from Amazon’s online advertising segment increased by 24% year-over-year to $17.7 billion.
Alphabet reported that its total advertising revenue for the third quarter experienced a year-over-year rise of 13% to $74.18 billion, while YouTube’s online ad revenue grew by 15% to $10.26 billion.
Reddit announced last Thursday that third-quarter revenue surged by 68% year-over-year to $585 million. The company witnessed a 19% year-over-year increase in global daily active unique users, reaching 116 million, exceeding the estimates of 114 million.
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